Virgin Money Sees Drop in Lending
Customer lending has fallen slightly at challenger bank Virgin Money across its third quarter, but bosses say they have continued to deliver strategic progress. Overall customer lending fell by 0.9% on the bank’s first half figures, to £72.04bn, while compared with the same period last year it fell 0.7%, from £72.57bn.
That was driven by reductions in mortgage lending, down 1.1% on the first half of the year at £56.01bn, and business lending, also down 1.1% at £9.21bn.
But unsecured lending grew 8.2% thanks to higher credit card use. The bank, which is preparing to be acquired by Nationwide Building Society, said overall arrears trends had stabilised, including a reduction in customers in credit card arrears, as credit provision was downgraded to £611m, down from £616m in the first half.
David Duffy, Virgin Money’s chief executive officer, said: “Our strategy remains on track, with financial performance in line with guidance. We delivered continued growth in deposits and unsecured lending in Q3 and remain focused on developing innovative new products for customers and maintaining good momentum into Q4.
The acquisition by Nationwide is progressing as anticipated with the recent CMA clearance, and we expect it to complete in the final quarter of the calendar year.”
Virgin highlighted several Q3 activities to investors including the launch of a “fully digitised personal loans proposition” last month with an expectation it will re-enter the open market for personal loans later this year. Bosses also signed a strategic partnership with Experian, which they said will use the credit score provider’s data and cloud technology to improve the digital customer experience for unsecured lending.
Adjusted cost:income ratio increased 2% on the bank’s half year results to 54% thanks to cost headwinds from inflation and deferral of cost savings. The bank said it had incurred £10m of restructuring costs and £10m related to a financial crime prevention programme it is introducing.
Virgin and Nationwide are now awaiting merger approval from the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), and court sanction. In light of the takeover, Virgin has put off certain restructuring activities following on from a significant programme of branch closures across the country.
The £2.9bn deal is still expected to complete in the final part of this year, and Virgin said it expects to recognise some further transaction-related adjustments including sums linked to the licences it has from Virgin Enterprises to use the Virgin Money brand.